Tue, 23 Dec 2008
Alfian and Adianto Simamora, Jakarta, The Jakarta Post

Indonesia and China signed deals Monday covering cooperation on eight energy and mining projects worth a total of around Rp 35 trillion (US$3.13 billion).

The cooperation agreements were signed during the third Indonesia-China Energy forum (ICEF), which was attended by Vice President Jusuf Kalla and China's visiting Deputy Prime Minister Li Keqiang.

"This is in the interest of the two countries. So we will purchase China-made products for the projects to help propel their economy, which will eventually have an impact on us as well," said Kalla.

"Investment in energy these days is far cheaper, and if we invest today, we will ready when the world economy recovers," he said.

The eight projects include one oil and gas project, one biodiesel development project, two coal mining projects and four power plant projects.

The first project is the extension of an oil and gas contract in the Madura Strait, East Java, which is run by China's CNOOC and Canada's Husky.

Upstream oil and gas regulator BPMigas signed a deal with the two companies to extend their contracts for another 20 years. Initially, the contract would have expired in 2012.

Four cooperation agreements on electric power production projects are also included, two of them including commitments from the Exim Bank of China to finance two coal-fired power plant projects initiated by the state power company PT PLN.

The two power plants are located in Pelabuhan Ratu, West Java, and Pacitan, East Java. Pelabuhan Ratu's power plant will have a total capacity of 1,050 megawatts and Pacitan's power plant 630 megawatts.

Both plants are expected to be in operation by 2010, according to PLN president director Fahmi Mochtar.

PLN has also signed a power project agreement with China National Technical Import and Export (CNTIE) and Shanghai Electric Group Company Ltd.

The two companies, together with two other local partners, will construct a power plant in Adipala, Cilacap, Central Java with a total capacity of 660 megawatts.

Fahmi said PLN was still looking for financing sources to complete the financing for this project. He added the three power plants were part of PLN's 10,000 megawatt coal-fired accelerated power production program.

PLN also signed a power purchasing agreement for a fourth power plant with a private independent power producer (IPP) PT GH EMM Indonesia, a subsidiary of a China-based power producer currently building a 227 megawatt coal-fired power plant in Simpang Belimbing, Muara Enim, South Sumatra.

"My hope is these deals will not merely be signed on paper but become reality and be implemented concretely," said China's Keqiang.

The ICEF also witnessed two coal mining cooperation agreements, including a joint venture between state mining company PT Tambang Batubara Bukit Asam and China's Huadian Corporation.

A deal to develop biodiesel plants in Jambi and South Sumatra was also signed.

Purnomo said the financial commitments for the eight projects would not be spent entirely until next year.

"The projects will take place over several years. Thus, the investments will be spent pro rata with the pace of project development," he said.

The projects are expected to provide almost 32,000 new job opportunities, he added.

RI-China deal

------------------Project----------------------Value

1. Oil and gas contract extension

in Madura Strait (BP Migas, CNOOC

and Husky Madura Ltd)-----------------------US$642 million

2. Power plant financing in Pelabuhan

Ratu (The Exim Bank of China and PT PLN)----US$481.94 million

3. Power plant financing in Pacitan

(The Exim Bank of China and PT PLN)---------US$293.23 million

4. Power plant construction in Cilacap---------US$605.29 million

(PLN, CNTIE and Shanghai Electric)----------Rp 2.45 trillion

5. Power purchase agreement for Muara Enim

(PT PLN and PT GH EMM Indonesia)------------US$330 million

6. Coal mining joint venture in Muara Enim

(Bukit Asam and Huadian Corp)---------------US$14.40 million

7. Biodiesel development in Jambi and South

Sumatra (PT Kurnia Selaras and China

Development Bank)---------------------------US$255 million

8. Coal mining cooperation in East Kalimantan

(PT Budi Dharma Kencana and Lark Guangdong

Power Resources Inc)-------------------------US$350 million

Sources: The third Indonesia-China energy forum 2008



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